U.S. Mortgage Applications Rise 16%, AIG Repays $6.9 B to Treasury

Arthi Gupta
09 Mar, 2011
New York City

U.S. indexes struggled after crude oil and gold gained on uncertainty in Libya. AIG repaid about $6.9 billion to the Treasury. Stocks edged lower on the second anniversary of bull market that saw near double in indexes.

[R]10:00 AM New York – U.S. indexes struggled after crude oil and gold gained on uncertainty in Libya. AIG repaid about $6.9 billion to the Treasury. Stocks edged lower on the second anniversary of bull market that saw near double in indexes.[/R]

U.S. stocks trade higher in the early trading as crude oil futures gain and unrest in Libya remained in focus.

Libyan forces advance in rebel held oil refining area Ras Lanuf and NATO member nations discuss no-fly air zone over Libya. U.S., UK and France are mulling a military response that several military and political analysts perceive as an excuse to invade third invasion of an Arab nation.

European indexes gained after German industrial production rebounded and Portugal successfully completed 2-year bonds auction raising €1 billion. Asian markets traded mixed as investors focused on local economic developments.

U.S. Mortgage Applications Soar

U.S. mortgage applications rose to their highest level in three months last week even as fixed interest rates rose. Mortgage applications increased 15.5% from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending March 4, 2011.

The Refinance Index increased 17.2% from the previous week and was the highest Refinance Index observed since the week ending January 14.

The seasonally adjusted Purchase Index increased 12.5% from one week earlier and was the highest Purchase Index recorded this year.

Thirty-year fixed mortgage rate increased to 4.93% from 4.84%.

AIG Reduces U.S. Treasury Stake

American International Group Inc. repaid about $6.9 billion to the U.S. Department of the Treasury with the proceeds from the sale of its MetLife equity securities last week and reduced the government's stake in the company.

With this payment, the company has now paid back about 70% of its TARP payment to the U.S. government.

AIG has paid about $36 billion to the Treasury in four major payments so far this year. The Treasury still holds about $11.3 billion of preferred interests in the company.

Talisman Sells Cypress A Assets To Sasol

Talisman Energy Inc. is selling a 50% net working interest in its Cypress A assets in the Montney shale play to integrated energy and chemicals company Sasol Ltd. for a total consideration of C$1.05 billion or $1.07 billion, the Canadian oil and gas giant said on Tuesday.

South Africa-based Sasol will pay 25% of the consideration or approximately C$260 million in cash at closing and will provide an additional C$790 million to fund 75% of Talisman's future capital commitments in the integrated joint-venture development area.

Tognum Reviews Daimler and Rolls-Royce Venture Offer

Daimler and Rolls-Royce have confirmed they intend to take over German-listed engineer Tognum through a tender offer by a joint venture company.

Daimler and Rolls-Royce will offer Tognum shareholders €24 per share in cash representing a total consideration of approximately €3.2 billion, about 30% above Friday’s closing price. Daimler currently owns 28.4% of Tognum.

However, Tognum said its management board will review the €24 per share acquisition offer made by a joint venture between Daimler and Rolls-Royce.

Warner Bros Plans Renting Movies

Warner Bros Entertainment said it will start renting movies via Facebook, the latest effort by movie studios to find new revenue sources as consumers buy fewer DVDs and spend more time online.

Earnings Review

Brown-Forman Corporation ((BF.B)), the alcoholic beverage maker stated third quarter net sales grew 12% to $962.4 million from $861.7 million in the prior-year period. Net income in the quarter rose 30% to $140.7 million or 96 cents per diluted share compared to net income of $107.9 million or 73 cents per share in the year-ago period.

Dynegy Inc. ((DYN)), the electric utility reported fourth quarter revenues edged higher 2.3% to $451 million from last year's $441 million. Net loss in the quarter narrowed 54% to $164 million or $1.36 per share compared to a net loss of $355 million or $2.33 per share in the prior year.

E-Commerce China Dangdang Inc. ((DANG)), China based online book and consumer goods maker reported fourth quarter total net revenues rose 59% to RMB 710.90 million from RMB 448.03 million a year earlier. Net income in the quarter declined 33.2% to RMB 14.80 million from RMB 22.15 million last year.

Empire Company Limited ((EMP_A.TO)), the company engaged in food retailing, real estate, and investment businesses reported third quarter total revenue increased 1.3% to C$3.88 billion from C$3.84 billion in the same quarter last year. Net earnings in the quarter declined 8.1% to C$62.8 million or C$0.92 per share from C$68.3 million or C$0.99 per share in the prior-year quarter.

Finisar Corporation ((FNSR)), the fiber optic equipment maker said third quarter revenues surged 57.6% to $263.02 million from $166.94 million in the same quarter last year. Net income in the quarter tripled 242% to $18.8 million or 22 cents per diluted share compared to $5.5 million or 8 cents per share for the year-ago quarter.

Honeywell International Inc. ((HON)), the diversified conglomerate forecasts earnings for the first quarter of about $0.80 per share, up about 23% from the prior-year period, and sales of about $8.7 billion, up approximately 12% from last year.

McDonald's Corporation ((MCD)), the fast food giant reported comparable sales growth of 3.9% on the strength across all regions.

Navistar International Corporation ((NAV)), the truck maker said first quarter sales and revenues fell 2.5% to $2.74 billion compared with $2.81 billion in the year-ago quarter. Net loss in the quarter was $6 million or 8 cents per diluted share versus a profit of $19 million or 26 cents per share last year.

Texas Instruments Incorporated ((TXN)), the semiconductor company said first quarter revenues are estimated in the range of $3.34 billion to $3.48 billion compared with the prior range of $3.27 billion to $3.55 billion.

The company estimates earnings in the range of $0.56 to $0.60 per share for the quarter as against the prior range of $0.54 to $0.62 per share.

The Boston Beer Company, Inc. ((SAM)), the alcohol beverages maker reported fourth quarter revenue grew 7.5% to $126.29 million from $117.48 million in the prior-year quarter. Net income in the quarter soared 63% to $12.17 million or 87 cents per diluted share compared to net income of $7.46 million or 52 cents per share in the year-ago quarter.